PTC extension benefits local wind industries

January 14, 2013

According to AWEA (American Wind Energy Association), the extension of the PTC will cover all wind projects that will begin construction this year, along with projects beyond 2013 to qualify for the credit.

The "fiscal cliff" and its last-minute agreement obviously affect the national landscape, but it also played a large role on the local front, as the Production Tax Credit (PTC)--which deals with the wind energy industry--was extended in the package.
According to AWEA (American Wind Energy Association), the extension of the PTC will cover all wind projects that will begin construction this year, along with projects beyond 2013 to qualify for the credit.
To develop a wind farm, it takes around 18 to 24 months. Also included was bonus depreciation, all of which will assist the industry.
Due to the uncertainty of the status of the PTC, many wind businesses stood stagnant as they waited for the outcome. In America, around 75,000 people are employed in wind energy. Without the renewal of the PTC, some 37,000 jobs could have been lost, according to a study from Navigant Consulting.
Some layoffs took place throughout the country, with a lack of orders for the upcoming year due to the political aspects of the industry. Now, more jobs can be created and around 500 manufacturing businesses can revive the work, which almost stood at a stand-still while waiting for the outcome.
AWEA noted in a press release that a version which extended the tax credit was actually assembled in August, but politics halted the passage until the last-minute deadline. They added that President Barack Obama "consistently supported the wind energy tax credits throughout the process."
Leading up to the extension, wind energy workers from all over the country were in constant contact with their representatives in Washington, urging them to pass the tax credit to improve the industry.

Leading While Waiting
But prior to the approval of the PTC extension, a report stated that while Texas leads the nation in carbon-free electric capacity from wind turbines, less wind would be seen following the completion of the $6 billion power line construction known as CREZ (Competitive Renewable Energy Zones) expansion program.
Due to its uncertainty, the proposed wind generations numbers have swayed and decreased. In early 2008, the number of megawatts (MW) stood at 11,200 as plans were in place to expand the transmission network to hold 18,500 MW of wind generation by the end of 2013.
Some wanted the network to be able to accommodate 24,000 MW of wind, while conservative estimates wanted to be set at 12,000 MW of wind. During this process by the Texas Public Utility Commission, ERCOT (Electric Reliability Council of Texas) was proposing the addition of 54,000 MW of wind energy.
But as the PTC extension and its unknown status continued, the number fell to about 20,000 MW of wind. Other factors included cheaper natural gas and tight financial markets.
In 2008, ERCOT expected around 9,300 MW of wind capacity by the end of that year; only 8,000 MW was completed. Now, ERCOT anticipates growth to stand at 12,100 MW of wind by the end of 2013 for the CREZ line, with 13,200 MW of wind by the end of 2015.
This number, however, still falls short of the 18,500 MW goal.
Since the inception of the CREZ line in 2008, the initial plan of 2,900 miles of high-voltage transmission lines has grown to become 3,600 miles. Thus, costs also increased from $4.93 billion to $6.87 billion, according to a report from the Texas Public Utility Commission.
1,400 miles--which includes 61 of the estimated 186 transmission projects--have already been completed. More than 110 projects are active, while 15 projects were cancelled.
All of the CREZ projects except one are slated for completion by the end of 2013. Among those building the CREZ lines are the Dallas-based company Oncor, a unit of Energy Future Holdings; American Electric Power's joint venture Electric Transmission Texas; and Sharyland Utilities, as well as affiliates of NextEra Energy, Spanish-based Isolux Corsan and LS Power Group.
But in between the wait of the PTC outcome, wind farms in the state were setting records. 8,638 MW of wind were reached on Christmas Day 2012; the previous record was a month earlier in November when it stood at 8,521 MW.
According to the article, one megawatt (MW) can supply energy to about 200 Texas homes during the sweltering summer and around 500 homes during average weather.

Looking Ahead
With the PTC renewal, national wind farms will continue to receive tax relief, which will kick-start construction this year to support the manufacturing of wind turbines and components. AWEA noted that the wind industry "installed the most electrical generating capacity" last year in America, but the PTC extension will support land-based, community and offshore wind projects.
But along with the good news, many developers in the industry--even some locally--are facing another concern: what constitutes the start of a construction project in 2013? In the meantime, the IRS (Internal Revenue Service) is working toward making that definition, but unfortunately uncertainty still lingers in the minds of those in the wind market.
According to the Energy Information Administration, 44% of all electrical generating capacity in the country for 2012 was installed through wind power. This record-setting number leads natural gas by a 14% increase and smaller amounts for coal and other sources.
The press release from AWEA also outlined some general information about wind energy, noting that the industry has become one of the fastest-growing manufacturing sectors in the country. With only 30 factories in 2004, the number has now grown to around 472, according to a study from the Congressional Research Service.
By 2030, based on estimates from the U.S. Department of Energy, wind energy will provide America with 20% of its electricity. As a result, around 500,000 jobs would be provided in the country, with a yearly average of over 150,000 workers directly employed through the wind market.
In addition, energy-related costs savings for the country have already been seen. The result would be savings ranging anywhere from $100 billion to $250 billion through 2030.